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Tax Advice Santa Rosa – WAYS TO PUT A TAX REFUND TO WORK

Is a tax refund coming your way? If you have already received your refund for 2012 or are about to receive it, you might want to think about the destiny of that money. Here are some possibilities:

â€¢ Start (or add to) an emergency fund. Many people donâ€™t have a dedicated rainy day fund, only the presumption that they might have enough cash in case of a financial tight spot.
â€¢ Invest in yourself. You could put the money toward education, career training, personal improvement, or some sort of personal experience with the potential to enhance your life.
â€¢ Use it for a down payment on a car or truck or real property. Real property represents the better financial choice, but updating your vehicle may have merit – cars do wear out, and while a truck also ages, it can help you make money.
â€¢ Put it into an IRA or workplace retirement account. If you havenâ€™t maxed out your IRA this year or have a chance to get an employer match, why not?
â€¢ Help your child open up a Roth IRA. Has your under-18 son or daughter worked and earned money this year? He or she can open a Roth IRA. Your childâ€™s contribution limit is $5,000 or the amount of his or her earned income for 2012 (whichever is lower). You can actually make this Roth IRA contribution with your own money if your child has spent his or her earnings.
â€¢ Buy some warehouse memberships. If you have a large family or own a small service business, why not sign up to save regularly?
â€¢ Pay down debt. Always a smart choice.
â€¢ Establish a financial strategy. Some financial advisors work on a fee-only basis. I can perform a review of your current financial situation and give you pointers for the future with no further obligation.
â€¢ Pay for that trip in advance. Instead of racking up a bigger credit card bill, consider pre-paying some costs or taking an all-inclusive trip (some are not as pricey as you might think).
â€¢ Get your home ready for the market. A four-figure refund may give you the cash to spruce up the yard and/or exterior of your residence. Or, it could help you pay a professional who can assist you with staging it.
â€¢ Improve your home with energy-saving appliances. Or windows, or weatherstripping, or solar panels â€“ just to name a few options.
â€¢ Write a proper will or create a trust. Your refund could pay the attorney fee, and the will or trust you create will insure a more ironclad estate plan.
â€¢ See a doctor, optometrist, dentist or physical therapist. If you havenâ€™t been able to see these professionals due to your insurance situation or your personal cash flow, the refund might provide a way.
â€¢ Give yourself a de facto raise. Adjust your withholding to boost your take-home pay.
â€¢ Pick up some more insurance coverage. The typical flood insurance policy in a low-to-medium risk area costs less than $1,000 (and sometimes less than $500). A $1 million personal liability umbrella policy can usually be bought for $400 or less.
â€¢ Pay it forward. Your refund could turn into a charitable contribution (deductible on your 2012 federal tax return if you itemize deductions).

In the past two years, federal tax refunds have averaged about $3,000. Thatâ€™s a nice chunk of change â€“ and it could be used to bring some positive change to your financial life and the lives of others.

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The information contained in this site is for illustrative purposes only and is based on a general viewpoint of our typical clients. The information should not be construed as investment recommendations. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for an investment portfolio. Please consult with a qualified professional to determine the best approach for your situation. Past performance is not indicative of future results. Montgomery Taylor & Co., LLC is a Registered Investment Advisor with the California Department of Business Oversight.